China Takes Advantage Of September Price Drop; Imports Record Amount Of Gold

Tyler Durden's picture

Remember how virtually all "experts" speculated that the drop in the price of gold would set off a liquidation cascade in China, where everyone was "loaded to the gills" and at the first hint of deflation would dump all holdings (not to mention that economic Ph.D. proclaimed the gold "bubble" popped two months and $200 lower)? It seems that as so often happens when all experts agree on something, it is precisely the opposite that happens. The FT reports that "Chinese gold imports from Hong Kong, a proxy for the country’s overall overseas buying, leapt to a record high in September, when monthly purchases matched almost half that for the whole of 2010....After hitting a nominal all-time high of $1,920.30 a troy ounce in early September, the yellow metal fell to a three-month low of $1,534 an ounce later in the month. Chinese investors snapped up the metal as prices fell." Fair enough: this means the natural bid under gold will pretty much always be there, especially since the SHCOMP plunged at the same time, and if there was truly cross asset liquidation, imports would hardly rise. Which begs the question: if not China, then who sold? Was the move purely a function of fears that Paulson was liquidating? Or were rumors that various central banks are liquidating gold, actually true? We will likely find out when the next WGC report is filed. WE will also know that the Chinese number for total gold holdings is grossly underreported.

More from the FT:

Analysts expect the September import surge to continue until the end of the year as Chinese gold buyers snap up the yellow metal in advance of Chinese New Year, China’s key gold-buying period.


“In September we saw some bargain hunters come back into the market on the price dip,” said Janet Kong, managing director of research for CICC, the Chinese investment bank.


Data from the Hong Kong government showed that China imported a record 56.9 tonnes in September, a sixfold increase from 2010. Monthly gold imports for most of 2010 and this year run at about 10 tonnes, but buying jumped in July, August and September. In the three-month period, China imported from Hong Kong about 140 tonnes, more than the roughly 120 tonnes for the whole 2010.

And before the experts congregate and conclude that this time China will certainly start dumping gold, this time for realz, read this:

The last two months of this year are likely to see China’s gold imports surge further ahead of Chinese New Year, supporting gold prices, according to Ms Kong. “We’ve noted a quite strong seasonality in gold prices, typically prices go up in the months before the Chinese New Year.”

So in addition to being a comfort to gold bulls, does this report also undermine all goalseeked reported from China that inflation in the country is moderating? Because if anyone knows best, it surely is the locals.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
fuu's picture

More Gold Bitchez!

CharlieSDT's picture

They're gonna drop the bomb on us at some point and we'll be super sorry when they back the renminbi with gold.  That will be the Pearl Harbor of WW3.

IBelieveInMagic's picture

Looks like GTU ETF is buying gold with additional units they have created $180 million worth?

BaBaBouy's picture

Chinee buying Up Everything REAL, for US Pennies on the dollar...

Thanks ALL Genious MBA's for getting us here!!!!!!!!!!!!!


SRSrocco's picture


Yes it is true that China bought a great deal of gold in SEPT.  They also used to export 3,500 tonnes of silver a year and now they IMPORT silver.  The Chinese are smart to buy gold and silver when they get globbered while here in the states we have our DEFLATIONIST ANALYSTS who tell us to sell gold and silver on Spikes.  I am not going to name names...but there are at least a good dozen of them out peddling the deflation card.

One more thing... many are saying silver is behaving more like copper and is more an industrial metal than a precious metal.  I don't know of any COPPER EAGLES, PHILHARMONICS, MAPLES or etc.  It's mostly gold and silver.

Lastly, silver is actually doing much better than copper over the past year and a half.  In March of 2010 you could buy 5lbs of copper for one ounce of silver, whereas today you can buy 9.5 lbs of copper for one ounce of silver.  I have written a blog piece at the SILVERGOLDSILVER website which you can find at the link below:


When gold was taken down in SEPT, silver's fall was almost identical.  Silver is heading much higher with gold.  Deflation is for dummies.

trav7777's picture

Platinum is behaving like copper and is WAY more precious than silver...or gold

bernorange's picture

China appears to be preparing for internationalization of the Renmini using gold as a throttle.  Whether or not they go all the way and back the currency with gold remains to be seen.  I don't think it's a coincidence that they and their good friends Russia have been so aggressively acquiring physical gold though.

trav7777's picture

yeah, um, at the same time they are pumping 1T yuan into their banks?  LOL at the CNY as any kind of reserve currency.  As a reserve you're better holding toilet paper than Chinese paper.

EL INDIO's picture

Actually that would be the worst think they can do.

They would be the biggest losers with minuscule Gold reserves compared to the US and Europe.

Assuming America still has its Gold, such a move would destroy the dollar as a reserve currency but it would also destroy/devalue the debt too, making China poor and America rich again.

The Chinese are trapped and will be trapped for a long time unless they invade America.

DoChenRollingBearing's picture

China invade America...  How?

trembo slice's picture

key word in your analysis... ASSUMING

so many things happen that are counter-intuitive in the world marketplace because it is totally fucking manipulated.  while the Chinese have indeed backed themselves into an unsatisfactory position... they are exposed to too much US debt....

they are in a much better position than we are.  we are debtors, they are creditors.  when the goods stop flowing here and the world monetary system changes away from the dollar-reserve standard we will be the ones that get FUCKED. 

they also run an inflationary monetary policy... so they have garaunteed the inevitable bursting of their real-estate bubble... but we are the ones that are trapped.

we lack the political will to address the fundamental problems with the US economy... i.e., we seek to usher in economic growth based on flawed economic policies which view the world upside-down... more spending, more debt, more money.

we cannot grow our way out of our debt obligations... with future entitlement promises our debt figure is closer to $150 trillion than $15 trillion.  We are trapped.  We will print to cover our obligations, so anyone earning dollars for a wage or forced to deal with dollars (any oil exporter) will be forced to accept a lower standard of living.

buy silver bitches.

trav7777's picture

due to how china dealt with reserves, they aren't really a creditor in the sense that you believe

Libertarian777's picture

don't see that happening.

Renminbi has to be pegged to the US dollar or Chinese exports fall off the cliff.

We're in a symbiotic relationship, with a lose-lose situation. All the Chinese can do is get rid fo the US fiat by exchanging it for hard assets.

Not to mention China's debt problem. Think they're much better  the US? The state and local governments have trillions in debt and mortgage losses. I doubt the politburo in China would dare give up legal tender laws and fiat currency and restrict themselves to hard asset backed currency.

DoChenRollingBearing's picture

Yesterday I read somewherre that lots of RICH Chinese are trying to get OUT!

trav7777's picture

China will fucking steal anything from anyone the Party wants.

This is precisely why NOBODY would trust them as a reserve currency...EVER.  They've tried to steal every single technology that has ever entered their four corners and then counterfeit it.

Yeah, with all the fake rolexes, LV, and stolen high speed rail systems, right, Europe is right there with the yuan bein a reserve LOL.  Nobody who ever put any IP into China would trust anything they ever wrote on paper.  Ever.

China had the ORIGINAL hyperinflation.

Carlyle Groupie's picture

China: largest gold exporter in the world.

Importer too? It does wonders for GDP.

lookma's picture

Most of China's gold output stays in the country

Not exporter says your wiki link!

Cthonic's picture

Perhaps meant to say 'largest producer', in which case may be pointing out that importing gold would shrink their trade deficit.

Carlyle Groupie's picture

No id-er. Just putting it out there. Lotsa gold in China.

When I need some and do not want to fill out the US-1099. I go to China.

Thank you from China!

bernorange's picture

China stopped exporting gold a few years ago.  They are keeping national production and importing gold now.

moskov's picture

China is the Biggest Producer of Gold and it's ileagal to ship gold outside of China for even significant amount.


The other thing is China's gold reserve in ''Fort Knox''  wasn't belong to the current communist government , but the former government of KMT aka Republic of China during WW2. Since the establishment of Communist Government, China never ship any its own gold outside of China, and all the gold products they mined for themselves from outside of China are all bypassing the trading in London and ship directly to Shanghai.

So basically the socalled WGC or Fed will never be able to get to know exactly how much their gold reserve is just like their nuclear heads. It's all under-reported for national security

s2man's picture

I thought China kept/bought all domestically mined gold...

CPL's picture

WTF just happened on the markets?


Seriously straight line up.  All exchanges..

JW n FL's picture



Listen.. when they are busy doing God's Work.. everything goes up towards heaven!

We will all be saved now!

Thank God for Wall Street!


Open Market Operations / Heavy HFT Volume are pushing the Markets Higher and PM's Lower! Just like in nature! all natural movements..

DoChenRollingBearing's picture

I'll go with the guy (who threatens the Iranian Navy if they show up here) on this one.  The PPT...

piaoyou's picture

What else can it be except Italy?

Do people really think replacing the PM would change Italian econimic picture? Italian PMI indicates a deep recession.

CPL's picture

Only reasonable explaination of why Oil, Gold and Silver are going batshit crazy as in UP.


Inflation incoming people.  Someone just printed another trillion.

Snidley Whipsnae's picture

China under reporting their gold purchases? Who coulda knowed? LOL

RobotTrader's picture

GSS, SSRI, CDE all getting dryhumped today 7%+

Many "money manglers" are picking up these beaten down junkers

In order to "make their year" in just 2 months.

css1971's picture

I think you just failed the Turing test.


GeneMarchbanks's picture

You really shouldn't get junked for those observations, after all, SSRI will not trade at these prices for long. There will be a sort of tech mania type deal at some point.

fuu's picture

He could say the sky is blue, the sun is warm, and the grass is refreshing and I would still junk him at this point.

NotApplicable's picture

But would you do the same to RoboTrader?

Spastica Rex's picture

Play our game and you will be richly rewarded! We can be generous, when the mood takes us.

YesWeKahn's picture

Market just jumped  0.5%  on this?

CPL's picture

Fuck the markets...


Broken forever.

NEOSERF's picture

Shhh...don't tell the Chinese but the EU has had another secret summit to nullify the value of will now be priced similar to copper and used for water pipes..

MonsterZero's picture

Seeing as I already use gold to filter my coffee I have no issue with using gold for water pipes. Thanks for the suggestion.

Ignorance is bliss's picture

Gold going to China, Russia, Venezuela, etc...leaving the west.  No worries we'll get it back after we win WWIII

william shatner's picture

Let's get physical, Physical... well you know the song.

ArkansasAngie's picture

"WE will also know that the Chinese number for total gold holdings is grossly underreported."

Well ... that's true for me and my gold, too.

As aside wouldn't countries such as Italy be better off if their gold was calculated at $5,000  instead of $1775?

Maybe some of these guys will starting wondering whether or not they are actually members of the 1%'ers or ... maybe they should start thinking like a 99%'er.

MarketTruth's picture

News Reporter FAIL is your gain. The longer sheeple have no clue, the more time you have to buy before they wake up.

Hook Line and Sphincter's picture

Assuming the reports are true, accurate, and not China propaganda, it begs the question of whether the Occidental PTB and sovereigns will have to change tact. Soon.

Do they want China to acquire the phyzz? Whats the geopolitical advantage? How does that satisfy the step to a world currency, unless there has been some sort of agreement behind the scenes that China has signed on.

It's hard to imagine they could be intending on rebooting a system where China wouldn't adamantly question and demand audit of stated AU quantities, as well as allow an unmonitored reserve of PM's that surely would be fractionalized.

Either China is double-dealing against the worlds population in cahoots with the West, or they will be a definitive target of the MIC.

( ! )J Hook Line and Sphincter


barnabeg's picture

Anyone know why the hell stocks are rallying?

CPL's picture

No clue.  No news.


It's like not one single retail trader in on the floor and a single HFT just bought itself into a position it will never escape from.


Now I wonder which one of the trade houses are fucked.